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India to be among top 3 life insurance market by 2020: Report

PTI Apr 10, 2011, 12.18pm IST

MUMBAI: India's insurance sector, which is witnessing a rapid growth, is likely to touch about USD 400 billion in premium income by 2020, making the country one of the top three life insurance and top 15 non-life insurance markets by 2020, according to a report.

"The insurance industry will continue to outpace the rapid economic growth to reach USD 350-400 billion in premium income by 2020 (approximately Rs 17-22 lakh crore), making India amongst the top three life insurance markets and top 15 non-life insurance markets by 2020," the report by Federation of Indian Chamber of Commerce and Industry (FICCI) and the Boston Consulting Group (BCG) has said.

The total penetration of insurance (premium as percentage of GDP) has increased to 5.2 per cent in 2011 from 2.3 per cent in 2001, said the report titled 'India Insurance - Turning 10, Going on 20'.

LIC scores best in claims settlement during 2010-11

Niladri Bhattacharya / Mumbai May 24, 2011, 0:46 IST

At a time when customer service and satisfaction is becoming the key to success for life insurance companies, the claim repudiation ratio (in case of death claims) has improved over the last financial year. According to data from company sources, the Life Insurance Corporation of India (LIC) still remains the benchmark when it comes to settling death claims. However, major private players are also fast catching up.

During 2010-11, LIC improved its repudiation ratio for death claims to 1.09 per cent from 1.21 per cent in the previous year. In the same period, the public sector insurance behemoth settled 97.5 per cent of death claims, whereas claims pending stood at 1.47 per cent.

“Overall, we have settled 99.6 per cent of the total claims in the last financial year. And 95 per cent of the death claims were settled within 15 days of intimation,” said a senior LIC official.

In total, during the 2010-11, LIC has settled around 18.3 million claims amounting to Rs.53,000 Crore, which includes survival benefits, maturity and death claims. Of this, Rs.6,000 Crore accounted for 721,000 death claims.

Among the private players, ICICI Prudential Life was the best performer in terms of claims repudiation ratio, whereas HDFC Life’s claims settlement ratio was the highest, respectively.

ICICI Prudential’s claims repudiation ratio stood at 2.8 per cent, whereas for HDFC Life it was at 3.97 per cent. During the same time, HDFC Life settled 96.03 per cent of the total death claims, while ICICI Prudential settled 94.4 per cent of claims. Claims pending for HDFC Life and ICICI Prudential stood at 0.61 per cent and 2.6 per cent, respectively.

Among the established players, the repudiation ratio for SBI Life and Max New York Life worsened to 16.74 and 14.85, respectively.

For the smaller or relatively new private life insurance players, the ratio still remains on the higher side. For instance, India First Life, which began operation in 2009, had a repudiation ratio at 9.4 per cent, whereas for IDBI Federal Life which started in 2007, it was 21 per cent.

CLAIMS REPORT

2009-10 **

2010-11***

Claimsrepudiated

Claimssettled

Claimspending

Claimsrepudiated

Claimssettled

Claimspending

LIC

1.21

96.53

1.41

1.09

97.50

1.47

ICICI Prudential

3.27

90.17

6.56

2.80

94.40

2.60

HDFC Life

4.67

91.14

4.20

3.97

96.03

0.61

Aviva Life

9.75

87.11

3.14

4.10

87.11*

3.14*

Birla Sun Life

10.62

89.09

5.82

4.99

94.66

0.35

India First Life

7.69

53.85

38.46

9.40

90.58

0.03

Max New York Life

12.31

65.51

7.14

14.85

78.01

7.14

SBI Life

14.75

83.27

1.96

16.74

82.24

1.03

IDBI Federal Life

23.81

49.52

26.67

21.00

65.00

14.00

* Close to year ago figures; ** Irda Figures; *** Unaudited figures

“The repudiation ratio improves over a period of time as in a death within two years (early death claims) of the issue of the policy requires investigation. So, for the newer companies the proportion of early death claims always remains high. Hence, the ratio is becomes skewed,” said an official at a private life insurance company.

Settlement of any insurance claim involves interpretation of a lot of technical conditions generally used by insurers to reject the claims. However, non-early death claims (claims after two years of the issue of the policy) do not mandate any investigation. Hence, the settlement procedure is faster and easier.

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